Category Archives: Information & Communication Technology

Oracle declares first-ever quarterly dividend of 5 cents per share; revenues climbed 2% to $5.5bn, ahead of expectations

Companies’ spending to handle extensively growing business data helped Oracle to actually grow during the economic downturn. Oracle Corporation (NASDAQ: ORCL) announced fiscal 2009 Q3 GAAP earnings per share were $0.26, up 3% compared to last year. Third quarter GAAP total revenues were up 2% to $5.5 billion, while quarterly GAAP net income was down 1% to $1.3 billion. Also, GAAP operating cash flow on a trailing12 month basis was $8.5 billion, up 17%. However, Oracle predicted that the weaker economy and currency effects would leave its revenues from new software licences in the next quarter 17-27% lower than a year before, with overall revenues down 10-14%.

Over the last five years Oracle Corporation consistently outperformed the Dow Jones Industrial Average index. As of last close on March 19 2009, Oracle closed at 17.37, 25.87% above the 52 week low of 13.80 set on March 09, 2009.

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IBM to acquire Sun for $6.5bn in cash; the two companies account for two-thirds of the global market of high-end servers

According to Financial Times, IBM and Sun Microsystems were in talks on Wednesday over the possible acquisition – which would be valued at $6.5bn (€4.8bn) in cash. Of course, as any deal of such significance, it would face intense antitrust scrutiny. The two companies account for 2/3 of the $25.5bn global market for high-end servers. The deal could let IBM build scale and cut costs sharply while boosting its computer hardware business in the slow-growing server market.

IBM seams to have a stable financial position as it grew revenues 4.90% in 2008 from 98.79bn to 103.63bn while net income improved 18.40% from 10.42bn to 12.34bn. Also cash reserves at IBM fell last year by 2.25bn, the company earned 18.81bn from its operations for a Cash Flow Margin of 18.15%. In addition the company used 9.29bn on investing activities and also paid 11.83bn in financing cash flows.

SUN cannot write up a similar statement. Its net income fell 14.80% last year, from 473.00m to 403.00m, despite flat revenues. A contributing factor has been an increase in costs as a percentage of sales from 27.76% to 28.49%. In 2008, cash reserves at Sun Microsystems fell by 1.35bn. However, the company earned 1.33bn from its operations for a Cash Flow Margin of 9.57%. In addition the company used 66.00m on investing activities and also paid 2.61bn in financing cash flows.

About IBM:
IBM’s major operations include Global Technology Services segment (GTS), Global Business Services segment (GBS), Software segment, Systems and Technology segment, and Global Financing segment.
Latest IBM acquisitions:
• On January 31, 2008 IBM acquired 100% of Cognos, Inc.
• On April 3, 2008, IBM acquired 100% of Telelogic, AB.
• In July 2008, IBM acquired Platform Solutions, Inc. (PSI).

About SUN:
Sun Microsystems offers core brands, such as the Java technology platform, the Solaris Operating System, the MySQL database management system, Sun StorageTek storage solutions and the UltraSPARC processor. Its network computing platforms are used by search, social networking, entertainment, financial services, manufacturing, healthcare, retail, news, energy and engineering companies.
Latest SUN acquisitions:
• On February 25, 2008, SUN acquired MySQL AB (MySQL), based in Uppsala, Sweden.

Five trends that will shape business technology in 2009 and five tips for a successful CIO during crisis

McKinsey’s report “Five trends that will shape business technology in 2009” shows that, since the last downturn, technology budgets are larger, businesses have automated more processes, employees make greater use of tech-based productivity tools, and e-commerce has moved to the core of day-to-day operations. At the same time, IT organizations have established better mechanisms to govern IT decision making and have consolidated local IT operations to cut costs.

Based on this combination of cost pressures and IT requirements McKinsey’s report suggests that:

1) The year 2009 will be a tipping point for the CFO’s involvement with IT. They may sign outsourcing deals, sell and lease back hard assets, place favourable vendor financing at the core of hardware and software purchasing decisions.
1st Tip: Successful CIOs will give the senior-management team practical ideas on how to optimize cash.

2) IT budgets in many organizations will come under tremendous pressure in 2009, reducing investment for new business capabilities.
2nd Tip: Successful CIOs will have to position themselves as honest brokers, pushing hard to evaluate IT investments in a fact-based way.

3) Senior executives that have used IT less successfully in the past will probably throw up their hands and shut off all discretionary IT projects for the duration of the downturn.
3rd Tip: The most effective course of CIOs will be to explain what it would take to improve the value equation for IT investments.

4) Policy makers and regulators will probably demand that IT systems capture more and better data in order to gain greater insight into and control over how banks manage risk, pharma companies manage drugs, and industrial companies affect the environment.
4th Tip: Successful CIOs should enhance their relationships with internal legal and corporate-affairs teams and be prepared to engage productively with regulators.

5) The vendor landscape will likely follow the current downward pressure on aggregate demand and massive uncertainty in currency markets. New entrants will grow rapidly and some players could experience significant reverses.
5th Tip: Successful CIOs will manage their vendor relationships as a portfolio so they will be well positioned as new winners evolve. CIOs will also need to be vigilant about how to manage transitions created by the consolidation or weakness of some service providers.

You may find McKinsey’s report at:
http://www.mckinseyquarterly.com/Organization/Change_Management/Five_trends_that_will_shape_business_technology_in_2009_2296

Outsourcing: business opportunity during crisis

Passiveness is the worst response in these uncertain times and organizations should consider a structured approach to evaluate and implement suitable alternate service delivery strategies.

Outsourcing may provide significant opportunities nowadays if companies understand the complexities of the market during crisis. Opportunities to extract value have increased but one should not neglect the risks involved in alternate service delivery.

The temptation now is to move quickly to extract additional value. But, in the face of increasing market uncertainty, outsourcing arrangements demand a higher level of analysis. Here is some advice for organizations either looking to take new opportunities or who already have outsourcing arrangements:

If you are considering taking new outsourcing opportunities:

  • Determine the scale and scope of work appropriate for an outsourcing arrangement, analysing the options to expand it to maximize your new opportunities;
  • Ensure the evaluation of potential service providers includes a thorough assessment of the impact of the economic crisis on current and future operations;
  • Consider new locations that may improve your delivery model. As service providers are moving towards periods of slower growth, you could encourage profit sharing and performance based incentive arrangements.

If you already have outsourcing arrangements:

  • Review the service providers’ expectations and commitments in existing arrangements and identify areas that need additional focus;
  • Assess whether the objectives of the original business model have been adjusted to account for any change to your business strategy/requirements;
  • Consider the need to change scope, scale or terms and focus of the current arrangement to increase commitment level.

Intelligent Benchmarking

“Intelligent Benchmarking” is an article I wrote for the “Business Week” Journal in February 2009. The article provides some tips & tricks on how to perform a successful benchmarking process namely:

  • correctly identify your necessities,
  • explore the hidden parts of statistics,
  • identify the optimum benchmarking frequency,
  • heal yourself from the “we can’t do it” syndrome,
  • involve your people within the process.

You may find below a PDF copy (Romanian version only):
“Intelligent Benchmarking,” Business Week Journal No.122, McGraw-Hill Publishing, Bucharest, 24 February 2009